Fearing that a Mideast war would cause
economic chaos for much of the
industrialized world, investors continued
to bail out of stock markets from New York
to Singapore on Thursday, sending prices
on nearly every major exchange to their
lowest levels in at least a year.

The Dow Jones industrial average plunged
76.73 points, or 3%, to close at
2,483.42--the lowest close since July,
1989. But the selloff was nothing compared
to the rout in Tokyo's market, where the
value of the Nikkei stock index fell
5.8%--the fourth-biggest one-day drop in
history.

Fears of war in the Mideast also sent oil
prices rocketing. The price of the
benchmark U.S. crude rose 71 cents
Thursday in New York to $31.93 a barrel,
the highest level in seven years.

"At some point, everyone (in the stock
market) rushes for the exit, and some
people get trampled," said Michael Metz,
market strategist at Oppenheimer & Co.
in New York.

By the end of the day, U.S. stocks were
worth $95 billion less than they had been
the day before. Share values have slid by
more than $500 billion since July, when
prices peaked, according to Wilshire
Associates, a Los Angeles firm that tracks
the value of shares traded on the nation's
largest exchanges.

The rise in oil prices was a major factor
in the stock selloff. Investors believe
that petroleum production in Saudi Arabia
and other Mideast nations could be
abruptly curtailed if war breaks out
between the United States and Iraq. That
would send oil prices and inflation
soaring, which could cause economic
problems in any nation that depends on
petroleum imports.

Although war always makes investors
nervous, a war in
the Middle East is particularly
worrisome because it would probably
affect worldwide oil supplies and
prices. Rising oil prices fuel
inflation.

Circuit Breakers

NYSE
Circuit Breakers

In response to the market breaks
in October 1987 and October 1989 the
New York Stock
Exchange instituted circuit
breakers to reduce volatility and
promote investor confidence. By
implementing a pause in trading,
investors are given time to
assimilate incoming information and
the ability to make informed choices
during periods of high market
volatility.